Multi-Echelon Inventory Model for Leading Suture Manufacturer

solving distribution challenges by an inventory management model

Situation

A client was struggling with how to determine inventory levels at all locations in their global distribution network and required business consultation for an electronic model to solve this problem from end-to-end in their supply chain

Goal

Create a multi-echelon, statistically sound inventory management model that:

• Meets client’s customer service business rules
• Accounts for any constraints within manufacturing and/or  logistics
• Maintains flexibility to account for environmental changes
• Well documented and easy to replicate for other  product lines

Approach

Tefen built a value stream map of manufacturing & distribution network of current state so as to ensure model mirrors reality
Mapped out data sources and identified relevant databases and respective fields for model calculations

Data cleansing was essential to ensure data integrity and that assumptions were correctly identified, discusses, and documented

Finally built model from scratch for the specific network based on following guidelines:

Data

• Account for all lead-times and lead-time variations
• Avoid multiple independent forecast updates in each
• Design differentiated service levels

Systems

• Synchronise order strategies
• Ensure visibility up and down the demand chain

Process

• Monitor and manage the bullwhip effect
• Correctly model the interactive effects

Results

• Modelled results estimated a total savings of approximately $715k for pilot study which only included one product line, 200+ SKUs
• Model is a power tool to measure results and monitory results, available to supply chain to make educated decisions
• Greater accuracy in inventory level calculations, optimize stocking levels, and coordination between locations
• Delivered scenario modelling opportunities, results, and estimated savings